Asked by Timyia Thomas on May 01, 2024
Verified
Mike buys a new $25,000 turbocharged Dodge Vampire for cash.The dealer requires a certified check for that amount,so Mike gets his bank to certify his check for $25,000.One day later,the bank goes bankrupt.Rather than trying to recover in bankruptcy,the dealer pursues Mike.One of the dealer's theories is that Mike is secondarily liable on the check,and that the bank's default makes Mike liable on the instrument.Is the bank right?
Certified Check
A check for which the issuing bank guarantees the availability of funds by verifying the drawer's signature and setting aside the check amount, thus ensuring payment.
Bankrupt
A legal status of a person or entity that cannot repay debts to creditors and has sought relief through bankruptcy proceedings.
- Acknowledge the governing laws and bank protocols related to the handling of checks and stop-payment orders as illustrated in jurisprudence.
Verified Answer
ZK
Zybrea KnightMay 08, 2024
Final Answer :
No.Certification discharges the drawer's liability on the check.Of course,the dealer may be able to recover against Mike under some other theory.
Learning Objectives
- Acknowledge the governing laws and bank protocols related to the handling of checks and stop-payment orders as illustrated in jurisprudence.